Uber fizzles in Wall Street debut, opens below $45 IPO price

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A market value of less than US$75b is a considerable climb down from earlier projections: a year ago, bankers jockeying to lead the offering told Uber it could be valued at as much as US$120b in an IPO.

It was another twist in Uber's stunning and controversial rise from pugnacious startup to pugnacious transportation giant, a decade-long journey marked by repeated run-ins with local officials, the forced departure of cofounder Travis Kalanick amid allegations of a toxic corporate culture, and expansion into food delivery, bikes and scooters, freight trucking, and autonomous vehicles.

The world's leading ride-hailing service set the stage for its long-awaited arrival on the stock market by pricing its initial public offering at $45 per share late Thursday.

"Ultimately, the success of Lyft's and Uber IPO's offerings will be judged based on post-IPO performance and how these companies can sustain their growth, while moving toward profitability and lowering their cash burn", said Alex Castelli, managing partner at advisory firm CohnReznick.

Why it matters: One of the most anticipated Silicon Valley IPOs in recent memory didn't get off to the start that many expected as Uber priced its stock at $45 per share, towards the lower end of the expects $44 to $50 range. As of Friday's closing price, his stake in Uber will be worth $4.9 billion.

It's not the first time a company's stock has started off trading below its IPO price, not even this week.

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First day trading doesn't determine a company's future, however.

Uber, Khosrowshahi said, is dealing with a potential $12 trillion market so "it makes sense to lean forward". Losses have been a major concern for Uber and smaller ride-share competitor Lyft, who have both failed to make a profit after years of development as well as controversy. The lack of positive excitement for the biggest listing of a USA technology company since Facebook in 2012 suggests investors are becoming more choosy. Kalanick remains on Uber's board and while he kept a relatively low profile during the stock debut, he can still savor his newfound wealth.

Uber will face its next test Friday when its shares begin trading the New York Stock Exchange.

SharesPost principal analyst Alejandro Ortiz said the timing for Uber to start trading was bad given the uncertainty over the trade spat with China.

"This is going to cause some more caution in the IPO market", said Matt Kennedy, a senior market strategist at Renaissance Capital, which manages IPO-focused exchange-traded funds. "It's an important thing to consider if you're an investor and you saw value in the company and its disruptive potential, nothing has really changed in the past 48 hours".

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